Scrapped Captive Coal Mines: Production Around Half The Financial Year 2015 Peak

Forty-two months after the Supreme Court cancelled 204 captive coal block licences saying these had been allocated in an illegal and arbitrary manner, production from these blocks are far below the level before the court’s decision. As the court had, in its September 2014 order, allowed 42 operational blocks of the cancelled lot to function till March 2015, these mines’ production peaked in FY15 at 52 million tonnes but has since plunged headlong.

According to official sources, 89 of the cancelled blocks have been reallocated so far and only 28 of these are producing coal right now. Post-reallocation, these blocks’ cumulative production — excluding that of seven blocks that were given by the court to the “custody” of Coal India, which haven’t faced any disruption — was just 40.5 million tonne till January, 2018, that is, average annual production of just around 12 million tonnes. Even with the production of the seven “captive mines” with Coal India, the total output from the mines impacted by SC decision at present is half the level in FY15.

A waning of investor interest has forced the government to defer auction of the remaining of the cancelled blocks. In fact, it had to cancel the fourth round of auctions in early 2016 due to lack of response. This is in sharp contrast to the aggressive bidding for the 84 blocks that went under the hammer in 2014-15, which allowed the government to claim that coal-bearing states will get revenue to the tune of `2.4 lakh crore during the lifetime of the blocks.
Also, several of reallocated blocks are yet to commence production due to multiple reasons. Read More